The Munich-based Ifo Institute on Wednesday said its monthly credit indicator showed that credit constraints for German trade and industry "clearly sharpened" in July, with 45.1% of firms saying lending policies in the euro zone's biggest economy were restrictive, compared to 42.4% the previous month.

Compared to some other euro-zone countries, Germany has largely avoided the worst of the credit crunch. But concerns about the health of the nation's banking sector have fueled worries that tougher conditions could be yet to come, potentially choking off a recovery.

Ifo said tighter credit conditions were the result of massive equity capital losses by banks in the wake of the financial crisis.

It will need as much time as banks are cleaning up their balance sheets. This is not done through the "normal" recovery cycle we used to observe in the past. THIS time, banks have much larger problems.

Commercial real estates in the US are just beginning to be problematic - so are commercial real estates in Europe, too.

It will need as much time as banks are cleaning up their balance sheets. This is not done through the "normal" recovery cycle we used to observe in the past. THIS time, banks have much larger problems.

Commercial real estates in the US are just beginning to be problematic - so are commercial real estates in Europe, too.

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yeah agreed. also the ability to use interest rates as a mechanism for investment to start recovery is not in place if interest rates rise to provide incentive to save other consequences will ensue. effectively before the market could make recovery capital generation would have to be viable and until the debt is cut to a level where these consequences do not exist the ability to recover using that incentive does not work. so this is not the usual business cycle ala austrian economics as the fundamentals that are required for a free market are their.